Spectrum Enterprise makes Q2 2023 gains in enterprise, small businesses

Spectrum Business, Charter Communications' commercial business unit, saw growth across its small to medium business (SMB) and enterprise segments in the second quarter.

SMB revenue grew 0.2% year-over-year, reflecting growth of 1.7%. SMB customer relationships grew by 4,000 during the period.

However, Jessica Fischer, CFO of Charter, noted that this growth was “partly offset by lower monthly SMB revenue per customer, primarily due to a higher mix of lower-priced video packages and a lower number of voice lines per SMB customer.”

The SMB market results also saw the effects of aggressive rollouts of fixed wireless access (FWA) services. “We also continue to see some impact from fixed wireless access competitors in the price-sensitive customer segment of residential and SMB,” Fischer said.

Enterprise revenue was up by 3.2% year-over-year as primary service units (PSUs) grew by 6.2%, or 6,000, in the second quarter of 2023 versus 3,000 added in the second quarter of 2022. Fischer said that “excluding all wholesale revenue, enterprise revenue grew by 7.2%.”

SMB mobile opportunities
As Charter continues to make gains in residential space with its wireless offering, the cable MSO sees the potential to find new opportunities in the SMB space.

Charter overall has been seeing growth opportunities in its mobile business.

During the quarter, it added 648,000 spectrum mobile lines. At the end of the second quarter, we had over 6.6 million total mobile lines. “Over 11% of our Internet customers now have mobile service, and we expect mobile penetration to grow meaningfully over the next several years,” Winfrey said.

Winfrey noted that while Charter is making progress with bringing wireless services to the SMB market, “I think we can continue to do even better over time.”

He added that “it's still early days in the SMB space, but we can add value there the same way that we do in residential and attack the space.”

Fiber, Ethernet rising
Charter Spectrum Business continues to gain momentum in advancing its fiber and Ethernet presence with large and smaller business customers. Its aggressive fiber build-out has given it a third spot on Vertical Systems Group’s 2022 U.S. Fiber Lit Buildings LEADERBOARD.

While AT&T and Verizon still hold the dominant two spots on VSG’s Fiber Lit Buildings LEADERBOARD, its ranking shows the aggressive push cable operators have made to bring fiber to more businesses and bring a more significant threat to telcos that have long enjoyed their status as being the dominant choice for business customers. 

Rosemary Cochran, principal of Vertical Systems Group, noted that the demand for gigabit speed connectivity to support cloud-based services like SD-WAN, data centers, 5G, and other applications drove fiber installations in commercial sites in 2022.

“New fiber investments in the U.S. will continue to be impacted by pending federal programs and funding initiatives,” she said. “Opportunities in the commercial segment include monetizing the millions of small buildings underserved.”

Likewise, the cable MSO is making a mark in the Ethernet segment. Spectrum Enterprise also holds the number three spot in terms of Ethernet ports sold according to VSG’s 2022 U.S. Ethernet LEADERBOARD.

The cable operator can exploit the growing demand for dedicated internet access (DIA). VSG’s Cochran said, "Dedicated Internet Access (DIA) became the largest and fastest-growing segment of the U.S. Ethernet market in 2022.” 

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